Toyota looks set to overtake Ford

JAPANESE carmaker Toyota and its modest president, Fujio Cho, are on a roll. The company, which is vying with US rival Ford for the title of the world's second-largest player in the fiercely competitive sector, is predicting sales will hit a record of more than sevenm units next year.

The latest corporate outlook bolstered investors' hopes that Toyota can continue to grab extra sales in its key markets of Japan, Europe and the US even as overall growth rates remain tepid.

Toyota shares perked up 50 yen to 3640 today, adding to a run of recent gains. The stock, like the wider market, climbed off its year's low at the end of April. It peaked in September at a shade below 4000 yen.

In public at least, Cho is not taking the race with Ford too seriously. 'I have no idea what Ford's numbers are going to be this year or next year but my impression is that it is running way ahead of us,' he said. 'It would be impertinent for us to talk about overtaking them.'

Impertinence or not, if Toyota achieves its 7m sales that should be enough to eclipse Ford next year. Moreover, analysts reckon that Toyota could shift 400,000 more cars and trucks than Ford this year, and may even extend that margin in 2004.

Toyota's own forecasts suggest that group sales should reach 6.78m units this year. A hoped-for 4% gain next year would see sales hit 7.08m.

The company has benefited from a string of popular models. Its US sales have prospered, forcing its Detroit competitors to offer costly incentives to try to protect their market share at the expense of their bottom line.

There are risks to this rosy outlook, however. Toyota's performance, like that of other exporters, could be buffeted by changes in global currency rates, a key factor in the business environment over which it has no control.

A stronger yen - and all the current signs point to continued dollar weakness - would eat into Toyota's profits and could leave its share price hamstrung.

In an indication of the need for caution, influential investors' magazine Barron's caused a stir last month when it praised Toyota but said its stock was already close to being fully valued. 'While Toyota shares might still be a longterm buy, investors might consider taking profits now,' it said at the time.

Other carmakers also did well today as the market rose on the back of gains on Wall Street and positive US data. Honda Motor added 100 yen, or 2.2%, to 4660 and Nissan Motor traded up 21 yen, or 1.7%, at 1231. The Nikkei 225 Average closed 180.54 points up at 10,284.54.

Hong Kong investors rejoiced at Wall Street's rediscovered bullish streak and also took heart that this week's Sars scare was just that - a scare.

Banks led the upward push on expectations of better earnings next year. HSBC put on HK$1.50 to HK$120, affiliate Hang Seng Bank gained HK$1 to HK$99.75 and Bank of East Asia firmed 45 cents to HK$24.05.

There was mild profittaking in giant new listing China Life Insurance, which eased five cents to HK$4.475. The Hang Seng index advanced 137.32 points to 12,377.57.

South Korean microchips giant Samsung Electronics jumped 7000 won, or 1.6%, to 449,500 thanks to a near-2% gain in the Nasdaq. That helped Seoul's Composite index to rally 4.9 points to 812.46.